Essential Insights
In 2025, oil-linked capital from the Gulf, such as sovereign wealth funds and family offices, has become a notable factor in Bitcoin’s liquidity trends.
These investors are primarily entering Bitcoin through regulated avenues like spot ETFs.
Abu Dhabi has emerged as a key location for this transition, bolstered by substantial pools of sovereign-linked capital and the Abu Dhabi Global Market, a regulated center for global asset managers and crypto market intermediaries.
Investors from oil-rich regions cite diversification, long-term portfolio development, generational demand within private wealth, and potential for enhanced financial infrastructure as significant motivators.
Since Bitcoin (BTC) entered its prominent boom in 2013, major surges have been largely propelled by highly leveraged retail trading on less-regulated platforms. Interest from institutional investors surged after the first US Bitcoin exchange-traded fund (ETF), ProShares Bitcoin Strategy ETF (BITO), commenced trading on Oct. 19, 2021.
By 2025, a new capital source began to reshape Bitcoin’s market structure: oil-linked funds from the Gulf region, encompassing sovereign wealth funds, state-affiliated investment firms, family offices, and the private banking systems serving them.
These capital pools are entering the Bitcoin market primarily through regulated channels, particularly spot Bitcoin ETFs. Such inflows could instigate the next liquidity wave, potentially leading to narrower bid-ask spreads, enhanced market depth, and the capacity for larger trades with reduced price impact.
This article explores how oil-economy investors could affect crypto market liquidity, forecasts the characteristics of the next liquidity wave, and discusses their interest in Bitcoin. It also emphasizes Abu Dhabi’s importance as a regulated center and the practical limits of liquidity.
Who These Oil-Linked Investors Are and Their Importance to Market Liquidity
The term “oil-rich investors” encompasses a network of capital managers whose resources are linked to hydrocarbon revenues:
Sovereign wealth funds and government-affiliated entities in the Gulf, which manage large assets and often influence regional investment strategies
Ultra-high-net-worth individuals and family offices, which can act quickly compared to sovereign funds and typically channel demand through private banks and wealth managers
International hedge funds and asset managers setting up operations in Abu Dhabi and Dubai, partly due to their proximity to regional capital.
For liquidity, both the size of these allocations and how they are utilized are crucial. Numerous positions are funneled through instruments and platforms optimized for institutional engagement, aiding a more resilient market structure.
Fun Fact: Spot Bitcoin ETFs do not possess futures contracts but instead hold Bitcoin in custody, meaning net inflows typically require direct purchases of BTC, closely linking investor demand to spot liquidity.
The Implications of the Next Liquidity Wave
From a market structure viewpoint, a liquidity wave is generally characterized by:
Consistent, larger daily inflows into regulated products over transient spikes
Deeper order books and tighter spreads in spot markets
Increased primary-market ETF activity, including share creations and redemptions, often involving professional hedging
Enhanced, resilient derivatives markets, including futures and options, backed by regulated venues and clearing services.
A key distinction from previous cycles is the advancement of market infrastructure. Spot Bitcoin ETFs offer a known, regulated mechanism for traditional investors, while prime brokerage, institutional custody, and regulated trading hubs have minimized operational barriers for large allocations.
Fun Fact: Authorized participants, not ETF issuers, generally manage the buying and selling of Bitcoin linked to ETF flows, with large financial entities creating and redeeming ETF shares and potentially hedging across spot and derivatives markets, subtly influencing liquidity.
Conservative Capital Flows Linked to Abu Dhabi
Spot Bitcoin ETFs have emerged as a straightforward avenue for this capital. The structure and risk profiles of crypto ETFs, like BlackRock’s iShares Bitcoin Trust (IBIT), differ from traditionally registered funds, a distinction that can be significant for investors focused on governance and compliance.
In Q3 2025, the Abu Dhabi Investment Council boosted its Bitcoin exposure by expanding its position in IBIT. A regulatory filing indicated the fund increased its stake from approximately 2.4 million shares to nearly 8 million by Sept. 30, with the position valued at roughly $518 million at the end of the quarter based on the closing price.
These figures indicate that Gulf-based capital is gaining Bitcoin exposure through US-regulated listings. Even when executed through a straightforward ETF acquisition, such inflows can enhance liquidity as market makers and authorized participants may hedge exposure across spot and derivatives markets as flows shift.
Reasons for Abu Dhabi’s Oil-Linked Interest in Bitcoin
Several interconnected factors explain why oil-rich investors are keen on Bitcoin:
Diversification and Long-Term Strategy: Gulf investors, particularly those associated with sovereign entities, often pursue long-term themes, diversification, and global opportunities. Some institutions regard Bitcoin as a potential long-term store of value, akin to gold in multi-asset portfolios, albeit with differing risk profiles and volatility.
Generational Changes in Wealth: Wealth managers in the UAE report rising interest among clients in regulated digital asset exposure, notably among younger high-net-worth investors. This trend has prompted traditional platforms to enhance access via regulated products and venues.
Creating Supporting Infrastructure: In addition to direct investments, some regions are allocating resources towards crypto market infrastructure, including regulated exchanges, custody services, and derivatives platforms. These advancements are designed to lower operational friction for institutional participation and potentially foster more sustainable liquidity over time.
Fun Fact: Numerous spot Bitcoin ETFs employ multiple custodians and insurance layers, reflecting institutional risk management standards and providing reassurance to cautious investors who would avoid self-custody of private keys.
The UAE’s Role as a Regulated Hub
Liquidity often concentrates where regulations, licenses, and institutional partners are dependable. The UAE has established a robust framework combining federal regulation with specialized financial free zones like the Abu Dhabi Global Market (ADGM).
Various initiatives have bolstered ADGM’s standing as an institutional base. For instance, Binance secured regulatory approval under the ADGM framework.
As per a Reuters report, ADGM has experienced rapid growth in assets under management, a trend attributed to its proximity to Abu Dhabi’s sovereign capital pools. When market makers, prime brokers, hedge funds, and wealth platforms cluster in a single jurisdiction, it can support continual two-way flow, enhanced hedging efforts, and tighter pricing.
Strengthening Bitcoin Liquidity with Oil-Linked Capital
Inflows from sovereign wealth funds tied to the oil sector can provide an extra layer of institutional demand in the Bitcoin market, potentially reinforcing liquidity and market depth.
The ETF Flywheel: Institutional acquisitions through spot ETFs can initiate share creations, hedging operations, and related trading by professional intermediaries, thereby increasing turnover and tightening spreads, particularly with steady inflows.
Significant OTC Trades and Prime Brokerage: Large investors often favor block trades and financing arrangements to minimize market disruption, encouraging intermediaries to deploy capital and enhance execution services.
Regulated Derivatives and Clearing: A more advanced, regulated derivatives landscape can refine price discovery and risk management, allowing market makers to handle risks more effectively, contributing to tighter quotes in the spot market.
Fun Fact: Spot Bitcoin ETFs trade during stock market hours, whereas Bitcoin operates 24/7. This discrepancy can lead to price gaps at market openings, especially following significant overnight movements or weekend volatility.
Institutional Exits and Liquidity Constraints
Institutional involvement does not negate downside risks. Bitcoin remains highly volatile, and even popular products can experience sharp outflows.
For instance, Reuters reported that BlackRock’s iShares Bitcoin Trust (IBIT) recorded a substantial single-day net outflow of around $523 million on Nov. 18, 2025, amid a broader downturn in the crypto market. The article noted factors such as profit-taking, diminishing momentum, and a shift in preference toward gold.
Access does not guarantee ongoing investments. Liquidity can flow in both directions, meaning the same infrastructure that accommodates large inflows can also facilitate rapid withdrawals.
Regulatory environments also influence market access. Policy and oversight shifts can either broaden or restrict how funds engage with Bitcoin-related products and, in some cases, with Bitcoin itself.
